Over the past two years, as Indian equity markets were on a strong bull run, retail investors flocked to the market through mutual funds. Retail investors put in Rs1.32 lakh crore in equity schemes over this period. Despite the strong inflows, foreign asset managers have decided to quit the Indian mutual fund business. Over the past few months, Goldman Sachs sold its mutual fund business to Reliance Mutual; Nomura Asset Managers sold 19.3 % of its 35% stake in LIC-Nomura MF to LIC Housing and KBC Asset Management (of Belgium) sold 49% stake in Union-KBC AMC to its Indian partner Union Bank. A few months earlier, Deutsche Bank had sold its fund business to Pramerica Mutual Fund.
Do they fear that the inflows will soon turn into outflows, if the market begins to move sideways? Frustrated by poor market prospects after 2009, a number of global players like Fidelity, Daiwa, Morgan Stanley, ING and PineBridge exited the Indian mutual fund business.